Retail trade enjoys brief upswing

The AFGC CHEP Retail Index indicates moderate improvement in retail trade with an increase of 3.3% in overall retail activity.

On a monthly comparison, the Index shows that retail trade was 3.5% higher in June 2012 compared with June 2011 with a turnover of $21.3 billion but growth is expected to slip to 3.2% in August 2012 with a predicted retail trade turnover figure of $21.4 billion. Growth in nominal retail trade has picked up slightly since January 2012.

Factors most likely influencing the uplift in recent spending may include the series of Reserve Bank of Australia interest rate cuts since November 2011 and recent Federal Government Family Assistance Package payments. The Index predicts growth will pick up in the September quarter compared with the 2011 September quarter, but will remain moderate at 3.2%. However, the Index also predicts the upswing in activity will not last.

According to AFGC’s Acting Chief Executive Geoffrey Annison, consumer sentiment remained weak and broad retail conditions soft, which he attributed to continued flagging economic conditions in Europe and a weakness in house prices and the share market weighing on consumer confidence.

Dr Annison also pointed out the varying retail conditions in different states, with mining states experiencing healthy retail spending growth and other states battling much weaker retail conditions.

Australian Bureau of Statistics figures show that nominal retail spending growth in Western Australia has been trending at almost 10% over the past year while Queensland and the Northern Territory have been experiencing growth of 4-5%. Retail conditions are much weaker in New South Wales and South Australia with growth of about 2% over the past year, and less than 1% in Victoria and Tasmania.

CHEP Australia & New Zealand President Phillip Austin said conditions were stabilising and that the ongoing subdued nature of retail conditions was driving a greater level of collaboration between retailers, suppliers and service providers to achieve efficiency benefits in a low-growth environment.

The AFGC CHEP Retail Index is a collaborative project between the AFGC and CHEP Australia, powered by Deloitte. It uses CHEP transactional data based on pallet movements and is a lead indicator of ABS Retail Trade data.

CHEP is a global leader in managed, returnable and reusable packaging solutions, serving many of the world's largest companies in consumer goods, fresh produce, beverage and automotive sectors.

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